$PTRA An Electric Dead Cat BounceOn August 7th, Proterra Inc. (NASDAQ: PTRA) filed for bankruptcy due to its inability to pay off its current liabilities. As a result, the stock fell 87% and could continue its fall over the coming days. That said, bankruptcy plays have proven to be extremely popular among traders which could see PTRA stock have a dead cat bounce soon. While a dead cat bounce play is extremely risky considering the company’s current situation, investors could wait for a consolidation first to buy before its delisting on August 17th
PTRA Fundamentals
As things stand, PTRA stock is spiraling downwards after the company declared bankruptcy. So far, the stock fell 87% in response to the news, but it is worth noting that the stock could continue dropping over the coming days since the company is basically going out of business. Despite this, the stock may be poised to witness a dead cat bounce once it starts consolidating in a similar fashion to other bankruptcy stocks.
Bed Bath & Beyond
A prime example of a dead cat bounce is Bed Bath & Beyond Inc. (OTC: BBBYQ) which fell 83% upon declaring bankruptcy. However, that did not stop the stock from running afterward as it soared 127% after consolidating between $.17 & $.23. The stock then consolidated once again between $.27 and $$.3 before running for an additional 45%.
Cyxtera Technologies
Another example of a dead cat bounce after bankruptcy is Cyxtera Technologies, Inc. (OTC: CYXTQ), which fell nearly 50% overnight due to news of its bankruptcy. The stock continued gradually falling afterward until it reached $.02 where it started consolidating in that range before running 346% and reaching a high of $.087.
Considering the risky nature of bankrupt stocks, approaching the stock with haste is not a wise decision. In order to mitigate the risk associated with investing in bankrupt companies, investors could wait for consolidation before making a play on PTRA stock.
Technical Analysis
PTRA stock was trading in a neutral trend as it was trading in a sideways channel between $1.04 and $1.38 which it has broken after declaring bankruptcy. Looking at the indicators, the stock is below the 200, 50, and 21 MAs which is a bearish indication. Meanwhile, the RSI is extremely oversold at 8 and the MACD is starting to curl bullishly.
As for the fundamentals, PTRA stock may continue falling in the coming days after the company filed for bankruptcy. Given the popularity of bankruptcy plays, investors could wait for the stock to consolidate at new lows first before buying ahead of a potential dead cat bounce. With this in mind, there is no guarantee such a bounce may occur which is why investors should note that investing in PTRA stock and other bankruptcy plays is extremely risky.
PTRA Forecast
After falling 87% on filing for bankruptcy, PTRA stock is one to watch closely over the coming weeks for a dead cat bounce that may occur when its delisting date of August 17 approaches. Having said that, the stock may continue dropping to new lows over the coming days before consolidating which may be the time to start buying the stock ahead of a dead cat bounce. While a dead cat bounce may provide traders with major gains, it is not guaranteed to occur and investing in the stock is extremely risky.
